Let’s set the stage: To help his daughter establish credit, Don Debtor makes his daughter Dawn an authorized user on his Citibank credit card. An authorized user is simply that, someone that the borrower or account holder authorizes to use the credit card. However, authorized users are not contractually obligated to repay the debt to the bank. Only the borrower, in this case Don, is legally obligated to repay the debt.

Don loses his job and sadly had been unable to find work for over year. During that year, he used credit cards to make ends meet, but he is now out of credit, collectors are calling daily, one collector has sued him; so Don f-i-n-a-l-l-y decides to file bankruptcy. (more…)

Slim! But not impossible! Okay, the real answer: Student loan debt is non-dischargeable in bankruptcy unless the debtor can prove that paying back those student loans would cause an undue hardship. 11 U.S.C. § 523(a)(8). That means that the debtor must file an Adversary Proceeding in bankruptcy court and prove an undue hardship exists. Doing so is no small task; in fact, it is full blown litigation requiring document evidence, expert witnesses, and all the while the other side having unlimited resources using every litigation trick in the book to wear you down (e.g. motions for summary judgment, 8 hour depositions, challenges to evidence you wish to present, not cooperating with discovery, etc). After all, it is official Department of Education policy to oppose bankruptcy discharge of student loan debt. 34 C.F.R. § 674.49(C) and 34 C.F.R. § 682.402. (more…)

How do I determine if rental property qualifies as non-consumer debt? We have read that it is the “intent” of the mortgage that matters. We rented out our former home, but refinanced before doing so. We had to use our Veterans Administration loan privilege to refinance since it was the only way to refinance and then rent out without living in the property for a specified term. We have the rental application signed before the refinance, and then a rental agreement signed 3 days after refinance. Will this fact allow our mortgage to be classified “non-consumer” debt?

I filed for chapter 7 bankruptcy and it was discharged 11/08. I had four mortgages (owned investment property). I surrendered the properties and did not reaffirm the mortgage debt. My problem is the mortgage companies foreclosed on me even though I filed for chapter 7 bankruptcy. Now I not only have bankruptcy listed on my credit, I also have foreclosures listed. Is this standard? I thought they had to cease when the bankruptcy petition was filed. (more…)

Every year you spend struggling with debt is one year closer to having a poverty level existence in your golden years. Time is our one limited asset. We can’t make more of it and once it is passed, it is gone. If for no other reason, if you are in debt, you must seriously consider bankruptcy as an option for getting out of debt, you simply don’t have time. Every month and every year you spend struggling with debt is a month and year lost to save for the future, your kid’s college, invest in your business, or achieve other financial goals. (more…)

The Rule: Only buy items that have a per unit price of less than $1 per pound.

First, let me give credit; this rule comes from Jeff Yeagerand his book, The Ultimate Cheapskate’s Road Map to True Riches. The rule is fairly self explanatory, if the food item cost more than $1 per pound, don’t buy it. This rule is surprisingly effective when it comes to both saving money and eating healthy as it cuts out about 70% or more of what’s available at grocery stores, mostly the stuff that is bad for you anyway. (more…)

I am often asked to explain attorney’s fees and the costs associated with bankruptcy; one way to view bankruptcy is as an investment and look at the Return on Investment (ROI). For example, for an investment of $2,700 in attorney fees in bankruptcy to discharge $50,000 in debt, the ROI is 1,752% in as little as four months time. No kidding, even I was amazed by the numbers when you really think about bankruptcy in an ROI context (note, for this blog piece, I am only looking at ROI, the model can get fairly sophisticated, and hence more difficult to explain, when bringing in extrinsic risk factors). (more…)